Published on Thursday, January 30, 2020

Qantas CEO: Coronavirus could put some Asia airlines out of business

The coronavirus crisis could spell the end for some of the less financially secure airlines in Asia.

A prolonged outbreak could send some carriers with paper-thin margins spiralling into debt that they may not recover from.

Qantas group CEO Alan Joyce said there are many airlines with heavy exposure to the China market that could suffer.

"A lot of airlines may not be able to keep some of these operations going. It's survival of the fittest," said Joyce.

"A lot of them have huge growth and not much profitability. Things like this can have an impact on these models."

However Joyce said it is still too early to tell what the full impact will be.

"When we look at what happened around Sars, it impacted us by $55 million back in 2003. It meant we did cut back on some international capacity but it rebounded very fast."

Overall, Sars cost the global economy about US$40 billion, but the China travel market has grown about eight times as big since then.

It has already heavily affected other tourism-reliant sectors such as hotels and retail, as well as the lucrative Macau gaming market.

During Sars, Asia-Pacific carriers lost about US$6 billion in revenue but the industry has changed significantly since then.

There are substantially more low cost carriers which typically operate on thin margins, and many of these have gone all-in on the fast growing China market.



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